ch. 4 - Chapter 4 Study Objectives After studying this chapter you should be able to 1 Explain the revenue recognition principle and the matching

ch. 4 - Chapter 4 Study Objectives After studying this...

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Financial Accounting - Chapter 4 1 Chapter 4 - Study Objectives After studying this chapter, you should be able to: 1.Explain the revenue recognition principle and the matching principle. 1. Differentiate between the cash basis and the accrual basis of  accounting. 1.Explain why adjusting entries are needed and identify the major types of adjusting entries. 1. Prepare adjusting entries for prepayments. 1. Prepare adjusting entries for accruals. 1.Describe the nature and purpose of the adjusted trial balance. 1.Explain the purpose of closing entries. 1.Describe the required steps in the accounting cycle. 
Financial Accounting -Chapter 45Nature and Purpose of Adjusting EntriesThe purpose of adjusting entries is to allocate revenue and expenses among accounting periods in accordance with the revenue recognition and matching principles.  Because of the accrual basis of accounting, all revenue and 

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